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Institutional Support for Small Farmers in Water Management
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Introduction

According to the new series of national income released by the Central Statistical Office (CSO), at 2011-12 prices the share of agriculture in total GDP was 18 per cent in 2013-14. It can be noted from National Sample Survey Organization (NSSO), 70th round survey that agricultural households are dependent mainly on cultivation for their livelihood, as about 63.5 percent of the agricultural households reported farming as their main source of income. It is a fact that Indian agriculture comprises of 80% of small & marginal farmers. Small holding farming is a crucial factor for raising agriculture growth, food security and livelihoods in India. Therefore, the future of sustainable agriculture growth and food security in India is depending on the performance of small & marginal farmers. Small holders have low production (due to less area) which leads to decreased marketable surplus. The issue of profitability of small holding based agriculture has assumed significant view of increasing proportion of small and marginal farmers in the country. In this regard, institutional infrastructure support is required to integrate small farmers for bringing change and innovation in agriculture.

Unless infrastructure support to agriculture is augmented, it will be difficult to explore the capacity of the agricultural sector to its fullest potential. One of the major components that need to be addressed in particular is the water management infrastructure in the country. At 85%, agriculture dominates India’s water use profile. Declining water levels due to unsustainable inefficient irrigation practices, poor maintenance and development of surface water storage systems, and significant polluted surface and subsurface waters would severely affect water resources in the country.

Irrigation infrastructure in India is one of the most extensive in the world. Nevertheless, much of the developed potential is not utilized due to ineffective institutional arrangements which tend to invalidate the scientific and technical progress made in this field. Institutional reforms need to evolve and continually evaluated as India journeys towards becoming a global economic power. So, this research paper analyses how institution mechanism reform can contribute towards workable water management practices.

Fragmented land-small farm holdings

Fragmentation of land has decreased the average size of holdings in India to just 0.6 hectares, according to NSSO survey report 2013. About 103 million hectares of land is cultivated in India but it is divided into a staggering 449 million plots of land, some of them just a few hundred square feet in size. Just 0.41% of cultivated land is in 10 hectare or larger holdings. Over 65% rural households have less than one hectare land.

From the graph, it is clear that a farm household needs to have at least 1 hectare of land to recover its expenditure every month. Average monthly income for marginal and small farmers is between INR 5247-7348 where as the average monthly expenditure INR6020-6457 (NSSO, 2013). But over 65 per cent of households have less than one hectare of land, this means that two out of three farm households are simply not able to recover cost of production.

According to the NSSO, 70th round report, input costs work out to nearly 30 per cent of the total output an average farm household gets from a crop and cost for irrigation contributes 3.2% of total input cost. So there is a challenge to provide cost-effective input to those farmers to cover up their expenses to help make agriculture a more profitable livelihood. Access to irrigation, in turn, is one of the best ways to enhance small-farm productivity. With a secure water supply, farmers can get higher yields and harvest an additional crop.

Issues and Challenges for small Farmers: Access to Irrigation

Although India is the second largest irrigated country, only one-third of the cropped area is under irrigation. Irrigation is the most important agricultural input in a tropical country like India where agriculture is dependent on vagaries of the monsoon. India cannot achieve sustained growth in agriculture until and unless more than half of the cropped area is brought under efficient irrigation system.

Small holding agriculture depends more on ground water compared to large farmers who has more access on canal water because irrigation technologies are not customized for small farm and also expensive (Lester R Brown et al., 2000;).Groundwater contributes 60% towards total water required for farming and ground water depletion is a rising issue in many areas of India. So, marginal and small farmers are bound to encounter more problems regarding water in future, given existing trends. Satellite technology shows that groundwater in key states in northern India has continued to deplete speedily over the past five years. Therefore, water management is going to be crucial for these farmers. It may, however, be noted that large farmers capitalize on cheaper sources like canals while small farmers have to rent water. About 40 per cent of the irrigated area for large farmers is accessed from canals while it was less than 25 per cent in the case of small and marginal farmers (NCEUS, 2008).The percentage of marginal & small holders from wholly irrigated, partly irrigated, wholly un-irrigated are around 45%, 11% and 39% respectively. The total percentage of small and marginal farmers from partly and wholly un-irrigated is more than percentage of wholly irrigated. It is therefore necessary to drive institutional innovation and reform to enable sustainable water usage and management for smallholder farmers.

Review of literature– Institutional Arrangement in Water Management

Development of irrigation and water management systems are crucial for raising the overall standard of living in rural areas. Major areas of reforms are needed in rural water management, which include:

  • Prioritizing public investment through raising profitability of groundwater exploitation,
  • Augmenting ground water resources,
  • Rational pricing of irrigation water and electricity,
  • Participation of user farmers in the management of irrigation systems and, making groundwater markets equitable.

In a study, Shah et al (2009) indicate that the impact of the drought of 2009 had less severe effect than the drought of 2002 due to ground water recharge in the last few years. Watershed development and, community participation for water conservation is needed, under the broad segment of ‘water management’. The watershed development projects need be done in order to obtain benefits in rainfed areas. The National Rainfed Area Authority has big role in matters relating to water conservation and watershed development. Assets created under National Rural Employment Gurantee Scheme (MGNREGA) can help in improving land and water. State Government played an important role in the Gujarat miracle for agriculture in 2000s, where the state has recorded high and steady growth at 9.6% per year in agricultural state domestic product since 1999-2000. According to Shah et al (2009), the Gujarat government has aggressively tracks an innovative agriculture development program by improving availability of groundwater for irrigation. Mass-based water harvesting and farm power reforms have helped energize Gujarat’s agriculture. This was made possible by more than 100,000 check dams and a major program ‘Khet Talavadi’ of creating water ponds in the fields.

Maharashtra also has been experimenting with water management programs such as ‘Pani Panchayat’. The case study set an example of inclusive water management practices where small and marginal farmers were empowered with proper institutionalized control & regulation.

Pani Panchayat

The movement started in Naigaon village of the drought-prone Purandhar taluka of Maharashtra.

To deal with the drought situation a local leader took 40 acre land on lease from the village temple trust and developed a recharge pond in the recharge area of the village. The principles and protocols for water management and demand management include:

  • Only community equity irrigation schemes
  • Decoupling the water and land rights; landless people were also given water rights (through lease of land to landless people) leading to increased productivity of land, water and people.
  • Water distribution on per capita basis, for maximum of 2.5 acre land (grain need of a person is fulfilled from half an acre land, with a family size of 5)
  • No individual wells in the command area.
  • Restriction on sale of land; wherever land was sold, irrigation right was not passed on to the buyer.

It is argued that local socioeconomic set up fails to ensure community participation. Dominance by upper caste and richer members, lack of group dynamics, exclusion of local needs and institutions, ill-defined property rights, constraints in input supply such as credit and extension services, etc. discourage participation. It was suggested that the strengthening of existing local institutions, augmenting the resource base and ensuring equity in water access would allow for better management and development of water resources (BK Sahu, 2008).

Source: http://www.panipanchayat.com

Required Institutional Arrangement

Institutions such as Water User Associations (WUAs) and watershed committees have been playing a pivotal role in managing water resources efficiently and equitably. WUAs in Andhra Pradesh have been successful in providing access to irrigation facilities to tail-end farmers by cleaning of clogged canals, water conservation and monitoring the water losses. This has had a positive impact with overall acreage under Paddy cultivation increasing by about 40%. Long term solutions for effective functioning of WUAs is awareness building and promoting participatory monitoring and evaluation (S. Mahendra Dev,2012). In the Baldeva Medium irrigation Project and the Pigut Medium Irrigation Project in Gujarat, the WUAs are in charge of water management, setting tariffs and collecting 100 percent of the fees. The Mohini project in Gujarat, bulk water was sold on a volumetric basis to the WUA by the irrigation agency and the WUA collects water charges from the farmers. (Reforming Institutions in water resource management: Policy and performance by Lin Crase, vasant P. gandhi.)

PPP in Irrigation

Though WUAs have had considerable success, they still face challenges such as- raising finance for creating irrigation infrastructure, disputes with Panchayat over the utilization of public watershed funding, poor operational and maintenance experience of irrigation facilities, limited knowledge on water conservation technologies. Therefore, the private sector, if worked with, could be positioned to address majority of these challenges and bringing efficiency in water management systems.

Policy Perspective in PPP

The Planning Commission, Govt. of India, in section VIII (infrastructure) of its 10th five-year plan document mentions that “Despite massive investments and impressive achievements, a lot more investment is needed to fully harness the available irrigation potential. The unit cost of is so high that even recovery of interest on capital from the service is difficult, unlike many services which are able to pay for themselves with or without some incentives or subsidies. Hence the desirability of mobilizing financial resources from the private sector which will ensure better irrigation efficiency and better service.”

Ministry of Water Resources, Govt. of India though the National Water Policy 2012 has paved the way for private sector participation in water resource management. The private sector is expected to support the government and local village panchayats in planning, development and management of water resources by bringing in innovative ideas, generating financial resources, improving service delivery and raising accountability.

Government of India had recently launched Pradhan Mantri Krishi Sinchai Yojana in 2014 with an INR 50000 crore Corpus to achieve convergence of investments in irrigation facilities at the field level, increasing net irrigated areas, improving on-farm water use efficiency, enhancing adoption of precision-agriculture and other water saving technologies. The scheme over the next 5 years shall also assume responsibility for various irrigation projects that were poorly implemented despite adequacy of funds. Such projects shall be improved based on strict quality guidelines. About 1,300 watershed projects that have stalled will be completed.

Though Public Private Partnerships could be implemented at various stages of the development of irrigation infrastructure, our focus is on its applicability on WUAs. WUAs will ensure allocation of equitable amount of water to all the farmers in the command area based on landholding or type of sowing crop. They will be empowered to make critical decisions on water management such as levy of water utilization charges, implementing water conservation techniques and hiring private sector to maintain the infrastructure, in contract mode. In addition, water conservation projects can be funded by private financial institutions and farmers can take equity stakes in these projects.

Role of Private sector

Private sector will be engaged to undertake operation, management and maintenance of infrastructure services for defined recipients. Water rights will remain with the WUA and the private partner will only receive service fees for the services provided.

Role of Public sector

The Government could provide financial viability support from Pradhan Mantri Krishi Sinchai Yojana or any other watershed development scheme to develop the necessary on-ground infrastructure. Agricultural extension institutions will be providing the awareness and technical know-how on creation and management of WUAs.

Role of WUA

WUAs comprised of farmers and Panchayat members will be responsible for the overall management of the water resources in the village. They would be empowered to take decisions on water tariffs, water conservation techniques, engaging a private partner for operational and maintenance support. The WUA will also be able to direct raise credit from financial institutions to create the necessary infrastructure. Incentive instead of subsidy for high performance irrigation system will make farmer efficient use of water.

Infrastructure Finance

Financial institutions could provide directly to the WUA or the private partner who is responsible for developing the water management and conservation infrastructure.

Following case study of an irrigation project in Egypt shows how PPP could be leverage for improving water management.

Case study: Egypt: West Delta PPP in Irrigation

The Conceptual Framework and Transaction Model in public-private partnership for the West Delta Project are designed as a hybrid scheme based largely on the design-build-operate (DBO) model. The transaction involves contracting a private operator to take over a concession area consisting of about 79,800 hectares in the southern part of the West Delta, to design and construct the system, and to assume full operational responsibility for 30 years, including the associated demand and commercial risks. The public sector has ownership of the assets and takes on most of the financing-related responsibilities and risks. These include the currency risk associated with a potential devaluation of the Egyptian pound. The decision process from design to execution involves users from the conception, incorporates a water user council, and adopted a two-part tariff: farmers would bay both an annual fixed fee based on the land area connected and a volumetric fee based on the amount of water use.  

 Source: WorldBank, 2015

Way Forward

Indian agriculture is still heavily dependent on rainfall with just 35 percent of the total arable area being irrigated. There is an urgent need to increase the overall irrigated area in order to meet the growing demand for agricultural commodities. There is need for institutional reform in irrigation sector, with greater co-ordination required among the various stakeholders; Government, panchayats, farmers and the private sector.

The existing WUA framework is an ideal institutional structure at the village level for ensuring the end-users have greater control over the local water resources and equitable supply of water to all farmers. The private sector will bring the necessary financial resources and efficiency without having direct control over the water rights.

State Government and agricultural extension institutions should therefore focus on developing and strengthening WUAs, in administering the above mentioned water management activities, which would include decision making on water tariffs, a fairly technical task.

  • Capacity Building & Awareness

Agri extension services can engage local communities and WUAs in land planning and climate smart agricultural practices that minimize water consumption. Although capabilities of agri extension services to lead this kind of deeper engagement with WUAs are debatable, this system can be also improved by deployment innovative PPP structures.

  • Technology Adoption

The government must focus on facilitating the adoption of more efficient water extraction and delivery mechanisms, such as drip irrigation and work towards modernizing irrigation and drainage systems in the country.

A focus on deploying micro-irrigation systems like drips and sprinklers would significantly increase water-use efficiency and productivity. The wide gap between gross cropped area and gross irrigated area which has not improved much since the First Five Year Plan period needs to be addressed for increasing productivity, production, and enabling climate resilience.